Alex introduced the program by saying that compared to three years
ago, everyone now knows what a deemed export is. They have come a long way in
raising issue of awareness in deemed exports.

--Alex noted that three years ago BIS had few outreach events on
deemed exports, which were limited to small number of companies in high-tech
industries. BIS now conducts 120 outreach events per year. Increased staff in
Deemed Export Division has helped their efforts (staff has doubled over the past
few years).

--He noted that as a result of Inspector General’s report BIS has
spent the last few years working on deemed export issues.

--Next, Alex introduced the members of the panel, which included:

Rolf Migun, Manager of export controls compliance at the Oak Ridge National
Laboratory

--After the introduction, Alex discussed the deemed export year in
review.

--Congress authorized an increased budget for deemed export
compliance activities, which resulted in an increase in BIS deemed export staff
from three to six.

--BIS published two deemed export related Federal Register
notices in FY 2006, which included the withdrawal of the deemed export proposed
rule and establishment of the DEAC, the Deemed Export Advisory Committee.

--BIS received 840 deemed export applications in FY 2006. BIS
approved most applications received and less than 1% were denied. Almost 60% of
the deemed export licenses received were for PRC foreign nationals, followed by
India (13%), Iran (7%), Russia and Germany (2% each) and UK (1%).

--While some applications languish, most deemed export licenses
are processed in 40 days (down from 70+ days a few years ago).

-Next, Alex discussed the clarification of "use" technology. This
was a result of the OIG report indicating there was confusion in this area and
suggested that BIS change definition. BIS did not change the definition, but
provided clarification in the FR notice. The confusion related to the connector
"and" in the definition. Applies to "required" technology, which means that it
is peculiarly responsible for item to be export controlled. The May 31, 2006
Federal Register notice states that all six elements are required for "use"
requirement to apply.

--Technology that is publicly available is classified as EAR99 and
is not subject to licensing requirement in most cases (exceptions are Cuban-born
nationals or prohibited uses). Take a look at the Q&As on BIS website
regarding "use" technology issues.

--In the May 31, 2006 FR notice, BIS reaffirmed existing policy
with respect to third-country nationals, rather than using OIG’s suggestion of
using country of birth. The existing policy is based on most recent established
citizens or permanent residence. U.S. citizens, green card holders, are not
subject to deemed export licensing requirements.

--Scope of "fundamental research" also remains unchanged.
Fundamental research exclusion based on technology that is ordinarily shared
with scientific community. May be instances where preexisting controlled
technology may be used and therefore deemed export requirements may come into
play. Certain controlled fundamental research that is protected (placing a box
around the research or technology), may be subject to the EAR. See the BIS
advisory opinion on patents on research.

--Deemed Export Advisory Committee (DEAC). Purpose of the DEAC is
to base policy on collaboration with affected communities. DEAC met for first
time last Thursday. Program is only chartered for one year and is expected to
make its recommendation by next Fall. Will meet several times over the next few
months to get various perspectives and comments. Meeting will be published in FR
in advance.

I hesitate to write this lest I give anyone working at BIS, DDTC or OFAC any ideas, but here goes...

The agencies which collectively make up the American export control commissariat may be unlikely to win any customer service awards any time soon, but at least they will generally answer your calls (DDTC licensing officers excluded of course). Not so lucky are our British cousins, whose export control regulators at the DTI have officially, not to mention rather brazenly, decided to stop picking up the phone. And you guessed it, this act of bureaucratic nonchalance is being sold as a "change" to help DTI "respond more effectively to enquiries". There is an opportunity to provide "feedback on this new service", but no phone number was provided, natch.

Ohio Rep. Robert Ney personally lobbied the then Secretary of State
Colin Powell to relax U.S. sanctions on Iran. Who asked him to? A
convicted airplane broker who had just taken the congressman and a top
aide on an expense-paid trip to London, NEWSWEEK has learned. Ney's
lawyer confirmed to NEWSWEEK that federal prosecutors have subpoenaed
records on Ney's February 2003 trip paid for by Nigel Winfield, a
thrice-convicted felon who ran a company in Cyprus called FN Aviation.
Winfield was seeking to sell U.S.-made airplane spare parts to the
Iranian government—a deal that would have needed special permits
because of U.S. sanctions against Tehran.

Winfield never got the license, but things worked out better for Ney himself. On a subsequent gambling outing with Winfield's business partner the Ohio congressman just happened to parlay $100 into $34,000 in winnings. Quite a coincidence considering the $30,000 in credit card debt Ney carried at the time.

We've been down this roadbefore here at ECB, but by way of a quick summary -- a license is required to export most anything of US origin to Iran, including aircraft parts. Most of the time, the mandarins at the Office of Foreign Assets Control review applications for exports to Iran under a policy of denial. (Note to Newsweek: if you had contacted the agency with primary jurisdiction over the Iran sanctions rather than Commerce and State perhaps someone would have been able to comment.) But there are a few categories of prospective transactions which get an upgrade to case-by-case review. Such is the case with exports related to aircraft safety, or, as the Iranian Transactions Regulations put it:

Specific licenses may be issued on a case-by-case basis for the exportation and reexportation of goods, services, and technology to insure the safety of civil aviation and safe operation of U.S.-origin commercial passenger aircraft.

Some claim that OFAC is capricious in its application of this provision, favoring suppliers to particular airframe manufacturers. What's clear enough is the OFAC does issue licenses under the aircraft safety carve-out, as in this case from 1999:

The Clinton Administration has approved a license to allow Boeing, through a European intermediary, to provide aircraft parts to Iran Air. After
a painstaking review, the administration agreed to grant a waiver for the export and approve the license because the parts are necessary to ensure the safety of seven Iran Air 747s. According to State Department spokesman James P Rubin, "The American government seeks to ensure safe air travel for citizens of all nations. This waiver should not be viewed in terms of political content or messaging."

In October 1992, an El Al cargo jet crashed when two engines fell off its wing. That crash killed over 50 people. Following the crash the FAA (and its European counterpart) ordered modifications to 747s to prevent the engines from falling off. The modifications require that a special kit be installed to modify the struts used to attach engines to the wings of 747s. The Clinton Administration crafted its approval to ensure that the kits are installed on seven known passenger 747s operated by Iran Air and to prevent the kits from being installed on cargo aircraft.

Here's a bit of unsolicited career counseling for Rep. Ney. When you eventually resign in disgrace, send your resume on over to former Attorney General John Ashcroft's eponymous consulting firm. He's already lobbying on behalf of an Israeli defense company looking to reexport some US technology to South Korea, so I'm sure he'd be thrilled to bring someone on board with your experience. And what better way for a high-class outfit like the Ashcroft Group to hedge its bets than to lobby for both Israeli concerns and the country whose president would like to see them "wiped off the map"? (Just make sure you get a retainer.)